On Monday December 5, 2022, Cleveland City Council passed the Wage Theft and Payroll Fraud Prevention Ordinance (the “Ordinance”) – which prohibits the City of Cleveland (the “City”) from entering into contracts with “any person or entity” that has received an adverse determination pertaining to wage theft or payroll fraud in the past three years. Significantly, the Ordinance applies to all businesses that contract with the City, ranging from construction companies to food vendors.

While the intent of the Ordinance is focused on ensuring City contractors appropriately pay wages, the text of the Ordinance goes much further, potentially resulting in serious financial and criminal consequences for companies that currently (or hope to) contract with the City.

For example, under the Ordinance:

• Adverse determination means a final adjudication or final action by a court or governmental agency that a contractor or subcontractor or recipient of financial assistance has committed wage theft or payroll fraud.
• Wage theft means a means a violation of the Ohio Prompt Pay Statute, Section 4113.15 RC; the Ohio Minimum Fair Wage Standards Act, Chapter 4111, RC; Oh. Const. Art. II, Sec. 34a; Chapters 4109 or 4115 RC; Sections 4113.17, 4113.18, 4113.52 or 4113.61 RC; or a violation of any substantially equivalent federal or state law; as any of these laws may be amended or superseded.
• Payroll fraud means concealing an entity’s true payroll tax liability from government agencies by...

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